Hammond hails 'light at the end of the tunnel' for economy

Philip Hammond and Jean Claude Juncker

Philip Hammond and Jean Claude Juncker

PHILIP Hammond revealed during the Spring Statement that the UK's economy is again growing faster than forecasters predicted.

In response, shadow chancellor John McDonnell told MPs "we face, in every public service, a crisis on a scale we have never seen before".

Addressing the Commons earlier, Hammond said: "It [the call for evidence] will look at how the tax system can help drive the technological process and behavioural change that we need, not as a way of raising revenue, but as a way of changing behaviour and encouraging innovation".

The Spring Statement also included proposed consultations on reduced VED rates for the cleanest vans, and the potential contribution of non-agricultural red diesel tax relief to air pollution in urban areas.

Amid a clear political warning against "Labour's economic train wreck" (paired with his "light at the end of the tunnel" metaphor), the chancellor announced that growth for 2017 had been revised up by the Office for Budget Responsibility (OBR) to 1.7 per cent - up from 1.5 per cent at the Budget in November.

It should last somewhere between 20-30 minutes, but the entire session is expected to go on for a couple of hours.

Mr Hammond told Theresa May and her senior ministers that "thanks to the hard work of the British public, there is light at the end of the tunnel".

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However, growth for 2019 and 2020 will remain unchanged from previous estimates of 1.3 per cent and will rise to 1.5 per cent in 2021 and 2022. If these were to be improved, on the one hand it would keep property prices in check and on the other it would generate real benefits for not just the housing market but for the economy as a whole.

The Chancellor claimed we are at a "turning point in the nation's recovery" as he announced the economy grew by 1.7 per cent in 2017, compared to the 1.5 per cent forecast at the Budget in November.

The OBR expects inflation to fall from its peak of 3% to the Bank of England's 2% over the next 12 months.

It comes as the Office for Budget Responsibility has estimated that Britain's financial settlement with the European Union will cost £37.1 billion. Wages of the lowest paid are up by nearly 7%, he added.

Some of the UK's most influential trade bodies have welcomed Philip Hammond's commitment to bolstering businesses in his Spring Statement, but have also warned that more still needs to be done to support companies as the United Kingdom hurtles towards Brexit.

He also said the government was considering new taxes on single-use plastic and on the profits of tech giants like Facebook and Google.

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